Spectrum Brands Holdings Inc
For the period ended Mar 31, 2024. Filed May 9, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2024 · Filed May 9, 2024
SPB$86.68-2.7%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2023-12-31; filed 2024-02-08.
0000109177-24-000013
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-03-31; filed 2024-05-09.
0000109177-24-000022
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 97 previous paragraphs and 108 current paragraphs.
51 unchanged; 36 reworded; 21 added; 10 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 17 previous and 28 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (21)
Current report
•Gain realized from proceeds received on the representation and warranties insurance policies associated with the Tristar Business acquisition. Refer to Note 15 - Commitment and Contingencies in the Notes to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for further details.
Current report
•Non-cash gain realized from the repurchase of debt obligations at a discount, net deferred financing costs, during the three and six month periods ended March 31, 2024. See Note 8 - Debt in Notes to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for further details;
Current report
•Incremental costs associated with the recognition of product recall costs incurred by the HPC segment in collaboration with the CPSC, initiated at the end of the year ended September 30 2022 and during the year ended September 30, 2023, resulting in the accrual and recognition of incremental costs for the recall, product returns from customers, write-off of inventory on hand, and other costs such as notification, shipping and handling, rework and destruction of affected products, and consumer refunds, as needed. Such costs are not recurring and directly attributable to the recall event, excluding all other costs associated with product warranty and returns. During the three month period ended March 31, 2024, the Company was required by the CPSC to reissue a previously issued recall to provide a cash refund to customers, resulting in the recognition of incremental costs and reserves. Note 17 - Commitments and Contingenciesin Notes to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for further details;
Current report
The following is a reconciliation of Net Income (Loss) From Continuing Operations to Adjusted EBITDA for SBH, by segment, for the three month period ended March 31, 2024.
Current report
The following is a reconciliation of Net Income (Loss) From Continuing Operations to Adjusted EBITDA for SBH, by segment, for the three month period ended April 2, 2023.
Current report
The following is a reconciliation of Net Income (Loss) From Continuing Operations to Adjusted EBITDA for SBH, by segment, for the six month period ended March 31, 2024.
Current report
The following is a reconciliation of Net Income (Loss) From Continuing Operations to Adjusted EBITDA for SBH, by segment, for the six month period ended April 2, 2023.
Current report
The following is a reconciliation of Net Income (Loss) From Continuing Operations to Adjusted EBITDA for SB/RH, by segment, for the three month period ended March 31, 2024.
Current report
The following is a reconciliation of Net Income (Loss) From Continuing Operations to Adjusted EBITDA for SB/RH, by segment, for the three month period ended April 2, 2023.
Current report
The following is a reconciliation of Net Income (Loss) From Continuing Operations to Adjusted EBITDA for SB/RH, by segment, for the six month period ended March 31, 2024.
Current report
The following is a reconciliation of Net Income (Loss) From Continuing Operations to Adjusted EBITDA for SB/RH, by segment, for the six month period ended April 2, 2023.
Current report
Refer to thesegment financial data section below for further discussion on net sales results.
Current report
Gross Profit. The following is a summary of the gross profit and gross profit margin for the three and six month periods ended March 31, 2024 and April 2, 2023, respectively, and the principal factors contributing to the change for the three and six month periods.
Current report
Gross profit and margin increases are predominantly due to the cost improvements initiatives and the higher inflated inventoried costs that were realized during the prior periods with favorable mix. Despite reduced volumes, gross profit benefited from the improved mix realized by previous SKU rationalization initiatives and reduction in excess inventory sales. The impact from product recalls is due to the reissued product safety recall with the CPSC recognized during the three period ended March 31, 2024, further discussed in Note 15 - Commitments and Contingencies within Notes to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report.
Current report
Selling, general and administrative. The following summarizes the selling, general & administrative costs for the three and six month periods ended March 31, 2024 and April 2, 2023, respectively, including amounts as a percentage of net sales for each respective period.
Current report
Increase in sales, marketing and advertising costs for the three and six month periods are due to the investment towards brand marketing and advertising initiatives across segments plus increased incentive compensation costs from higher than expected results. Distribution costs for the three and six month periods decreased due to the improved optimization and fulfillment at our distribution centers and lower outbound freight costs. General & administrative costs for the three and six month periods increased due to higher incentive compensation costs, partially offset by lowered overhead costs from restructuring initiatives in the prior year, plus decrease in bank fees related to reduced factoring on trade receivables. Increased research & development costs for the three and six month periods ended March 31, 2024 are from an additional investment in new product development and innovation across segments. Reduced strategic transaction, restructuring and optimization is primarily due to reduced restructuring initiative spending, completion of Tristar Business integration and other non-recurring HPC transformation initiatives in the prior year.
Current report
Impairment of Intangible Assets. Impairment of intangible assets during the three and six month period ended March 31, 2024 was attributable to a triggering event during the three month period ended March 31, 2024 resulting in an impairment of indefinite lived tradenames. See Note 7 - Goodwill and Intangible Assetsin Notes to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for additional detail. Impairment of intangible assets during the three and six month period ended April 2, 2023 were attributable to the identification of a triggering event resulting in an impairment of the Rejuvenate® and PowerXL® indefinite lived tradenames in the prior period.
Current report
Representation and Warranty Insurance Proceeds. During the three and six month periods ended March 31, 2024, the Company recognized a gain of $65.0 million from its representation and warranty insurance policy associated with the Tristar Business acquisition. See Note 15 - Commitments and Contingenciesin Notes to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for additional detail.
Current report
Net sales decreased primarily from decreased volumes driven by lower demand in the aquatics product category, primarily from aquatics hard goods such as aquatic systems with lesser volume of new entrants into the category, whereas aquatic nutrition and consumables is showing signs of stabilizing. Volumes were also adversely impacted by the decision to exit non-strategic categories and lower margin SKUs in the prior year, positively impacting mix and profitability for the three and six month periods ended March 31, 2024. Lower foot traffic and sales within the pet specialty channel, primarily in NA, further contributed to the volume reduction offset by overall distribution growth in e-commerce channels globally. Organic net sales for the three month period ended March 31, 2024 decreased $9.0 million, or 3.0%, excluding a favorable foreign currency impact of $2.2 million. Organic net sales for the six month period decreased $14.7 million, or 2.6%, excluding a favorable foreign currency impact of $7.2 million.
Current report
Net sales increased due to higher volume primarily in the Controls product category with increased spring seasonal sales and distribution with key retailers during the three month period ended March 31, 2024, with favorable weather trends driving increase in retail traffic and accelerating seasonal inventory into stores by retailers compared to the prior year. Late warmer fall weather extended the selling season in the prior year and further contributed to higher sales during the six month period. The higher volume from Controls was partially offset by reduced volume in other product categories for Household Controls and Repellents as we expect retailers to be cautious in building inventory for the season and more in line with seasonal volume and expected traffic in stores for those respective product categories later in the summer and fall seasons. Volume in our cleaning products also declined with lower demand on restorative products and lost distribution within the product line.
Current report
Net sales decreased due to lower volumes in small kitchen appliances from reduced placements in NA from the prior year, with overall category decline and exit of lower performance and reduced margin SKUs in the prior year, partially offset by increases in LATAM. Volume decline from small kitchen appliances were partially mitigated through volume growth in personal care on a global basis and overall higher volume distribution through e-commerce channels, plus opportunistic sales when a competitor filed for bankruptcy further benefiting the six month period. Pricing improvements were primarily attributable to positive pricing in inflationary markets, reduced excess inventory sales and fewer low-margin promotions, further benefiting product mix and overall profitability. Organic net sales for the three month period decreased $10.3 million, or 3.7%, excluding a unfavorable foreign currency impact of $1.0 million. Organic net sales for the six month period decreased $38.1 million, or 5.9%. excluding favorable foreign currency impact of $5.7 million.
Removed paragraphs (10)
Previous report
•Incremental costs recognized by the HPC segment attributable to the realization of product recalls initiated in the prior year. See Note 15 - Commitments and Contingenciesin Notes to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for further details;
Previous report
The following is a reconciliation of net income to Adjusted EBITDA for SBH, by segment, for the three month period ended December 31, 2023.
Previous report
The following is a reconciliation of net income to Adjusted EBITDA for SBH, by segment, for the three month period ended January 1, 2023.
Previous report
The following is a reconciliation of net income to Adjusted EBITDA for SB/RH, by segment, for the three month period ended December 31, 2023.
Previous report
The following is a reconciliation of net income to Adjusted EBITDA for SB/RH, by segment, for the three month period ended January 1, 2023.
Previous report
Gross Profit. Gross profit and margin increased due to cost improvements and inflated inventoried costs that were realized in the prior year, partially offset by lower volumes..
Previous report
Operating Expenses. Operating expenses decreased due to improved costs and utilization of distribution centers, reduced initiative spending on integration and restructuring, partially offset with incremental investment in brand marketing and advertising.
Previous report
Net sales decreased primarily from softness in the global aquatics category, lower NA sales from the exit of non-strategic categories such as waste management and lower margin SKUs, and lower foot traffic and sales in the pet specialty channels, partially offset by an increase in dog and cat food and companion animal volume in EMEA and sales growth in e-commerce. Organic net sales decreased $5.6 million, or 2.0%, excluding a favorable foreign currency impact of $5.0 million.
Previous report
Net sales increased due to higher sales from the Controls product category where late warmer fall weather extended the selling season and and retailer reorder patterns improved compared to the prior year, partially offset by softness in consumer demand for some product lines within the cleaning category.
Previous report
Net sales decreased due to reduced placements in NA from the prior year, category decline in small kitchen appliances and exit of certain small kitchen appliance SKUs, mitigated through international sales growth across personal care and small kitchen appliances categories and higher volume through e-commerce, plus opportunistic sales when a competitor filed for bankruptcy. Organic net sales for the three month period decreased $27.8 million, or 7.6%, excluding a favorable foreign currency impact of $6.7 million.
Reworded paragraphs (36)
Previous wording
Our consolidated and segment results contain non-GAAP metrics such as organic net sales, adjusted EBITDA (“Earnings Before Interest, Taxes, Depreciation, Amortization”) and adjusted EBITDA margin. While we believe organic net sales and adjusted EBITDA are useful supplemental information, such adjusted results are not intended to replace our financial results in accordance with Accounting Principles Generally Accepted in the United States (“GAAP”) and should be read in conjunction with those GAAP results.
Current wording
Our consolidated and segment results contain non-GAAP metrics such as organic net sales, adjusted EBITDA and adjusted EBITDA margin. While we believe organic net sales and adjusted EBITDA are useful supplemental information, such adjusted results are not intended to replace our financial results in accordance with Accounting Principles Generally Accepted in the United States (“GAAP”) and should be read in conjunction with those GAAP results.
Previous wording
The following is a reconciliation of reported net sales to organic net sales for the three month period ended December 31, 2023 compared to net sales for the three month period ended January 1, 2023:
Current wording
The following is a reconciliation of reported net sales to organic net sales for the three and six month period ended March 31, 2024 compared to net sales for the three and six month period ended April 2, 2023:
Previous wording
•Incremental amounts attributable to strategic transactions, restructuring and optimization initiatives including, but not limited to, the acquisition or divestitures of a business, costs to effect and facilitate a transaction, including such cost to integrate or separate the respective business, development and implementation of strategies to optimize operations, reduce costs, increase revenues, improve profit margins, including recognition of one-time exit or disposal costs. These amounts are excluded from our performance metrics as they are reflective of incremental investment by the Company towards strategic initiatives and business development activities, incremental costs directly attributable to such initiatives and are not considered recurring or reflective of the continuing ongoing operations of the consolidated group or segments;
Current wording
•Incremental project costs associated with strategic transactions, restructuring and optimization initiatives including, but not limited to, the acquisition or divestitures of a business, costs to effect and facilitate a transaction, including such cost to integrate or separate the respective business, development and implementation of strategies to optimize operations, reduce costs, increase revenues, improve profit margins, including recognition of one-time exit or disposal costs. These amounts are excluded from our performance metrics as they are reflective of incremental investment by the Company towards strategic initiatives and business development activities, incremental costs directly attributable to such initiatives and are not considered recurring or reflective of the continuing ongoing operations of the consolidated group or segments. Refer to the Strategic transactions, restructuring and optimization initiatives discussion within the Overview section for further discussion on the projects and initiatives;
Previous wording
•Non-cash purchase accounting adjustments recognized in earnings from continuing operations subsequent to an acquisition, including, but not limited to, the costs attributable to the step-up in inventory value and the incremental value in operating lease assets with below market rent, among others;
Current wording
•Non-cash purchase accounting adjustments recognized in earnings from continuing operations subsequent to an acquisition, including, but not limited to, the costs attributable to the step-up in inventory value and the incremental value in operating lease assets with below market rent, among others During the three and six month periods ended March 31, 2024 and April 2, 2023, the Company recognized non-cash expense due to the incremental value recognized as part of the Tristar Business acquisition on right of use operating leases with below market rent;
Previous wording
•Non-cash asset impairments or write-offs realized and recognized in earnings from continuing operations, including impairments from property, plant and equipment, operating and finance leases, and goodwill and other intangible assets, when applicable;
Current wording
•Non-cash asset impairments or write-offs realized and recognized in earnings from continuing operations, including impairments from property, plant and equipment, operating and finance leases, and goodwill and other intangible assets, when applicable. During the three and six month period ended March 31, 2024, the Company recognized impairments of its Rejuvenate® and a non-core HPC tradename indefinite lived intangible assets, along with an impairment charge on a right of use operating lease asset associated with an HPC facility that was exited prior to end of its term. See Note 7 - Goodwill and Intangibles in Notes to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for further details. During the three and six month period ended April 2, 2023, the Company recognized impairment of indefinite lived intangible assets for its Rejuvenate® and PowerXL® indefinite lived tradenames, along with an impairment on idle equipment associated with the early exit of a GPC warehouse lease and impairments on right of use operating lease assets associated with GPC and HPC facilities that were exited prior to the end of their term;
Previous wording
•Incremental reserves for non-recurring litigation or environmental remediation activity attributable to significant and unusual nonrecurring matters with no previous history or precedent;
Current wording
•Incremental reserves for non-recurring litigation or environmental remediation activity attributable to significant and unusual nonrecurring matters with no previous history or precedent. During the three and six month periods ended March 31, 2024, such costs were directly attributable to legal costs incurred for the proceeds received from the representation and warranties insurance policies associated with the Tristar Business acquisition. Refer to Note 15 - Commitment and Contingencies in the Notes to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for further details;
Previous wording
•Unallocated shared costs associated with discontinued operations from certain shared and center-led administrative functions, through the close of the HHI divestiture on June 20, 2023; excluded from income from discontinued operations as they are not a direct cost of the discontinued business but a result of indirect allocations, including but not limited to, information technology, human resources, finance and accounting, supply chain, and commercial operations. Subsequent to the close of the HHI divestiture, amounts attributable to unallocated shared costs would be mitigated through income from TSAs, subsequent strategic or restructuring initiatives, elimination of extraneous costs, or re-allocations or absorption of existing continuing operations. See Note 2 – Divestitures in Notes to the Condensed Consolidated Financial Statements, included elsewhere in this Quarterly Report for further details;
Current wording
•Unallocated shared costs reflect the costs associated with certain shared and center-led administrative functions such as information technology, human resources, finance and accounting, supply chain and commercial operations, supporting the HHI business during the period the Company owned and operated the business through the close of the HHI divestiture on June 20, 2023. Such costs are excluded from income from discontinued operations as they are not a direct cost of the discontinued business but a result of indirect allocations in accordance of US GAAP, but reflected as part of income from continuing operations for all periods presented, and requiring retroactive adjustment for all periods presented. HHI was previously a segment of the consolidated group and was excluded from the consolidated Adjusted EBITDA since being recognized as discontinued operations. As a result, for all periods in which HHI was owned and operated by the Company, including comparable periods requiring retroactive adjustment, the adjustment is recognized to reconcile net income from continuing operations to Adjusted EBITDA of the remaining segments of the consolidated group. With the close of the HHI divestiture on June 20, 2023, there is no adjustment recognized as such shared costs are mitigated through income from TSAs during the transition period post-separation, with subsequent restructuring initiatives to rightsize extraneous costs. See Note 2 – Divestitures in Notes to the Condensed Consolidated Financial Statements, included elsewhere in this Quarterly Report for further details;
Previous wording
•Non-cash gain from the reduction in the contingent consideration liability associated with the Tristar Business acquisition;
Current wording
•Non-cash gain from the remeasurement in the contingent consideration liability associated with the Tristar Business acquisition during the six month period ended April 2, 2023;
Previous wording
•Impact from the early settlement of foreign currency cash flow hedges, resulting in assumed losses at the original stated maturities of foreign currency cash flow hedges in our EMEA region that were settled early due to changes in the Company's legal entity organizational structure and forecasted purchasing strategy of HPC finished goods inventory within the region, resulting in excluded gains intended to mitigate costs during the year ending September 30, 2023; and
Current wording
•For the three and six month periods ended April 2, 2023, the impact from the early settlement of foreign currency cash flow hedges during the year ended September 30, 2022, resulting in assumed losses at the original stated maturities of foreign currency cash flow hedges in our EMEA region that were settled early due to changes in the Company's legal entity organizational structure and forecasted purchasing strategy of HPC finished goods inventory within the region, resulting in excluded gains intended to mitigate costs during the year ending September 30, 2023; and
Previous wording
•Other adjustments primarily attributable to: (1) key executive severance and other one-time compensatory costs; and (2) non-recurring unusual insurable losses.
Current wording
•Other adjustments are attributable to: (1) key executive severance and other one-time compensatory costs; and (2) non-recurring unusual insurable losses, including any the receipt of insurance proceeds or recovery realized.
Previous wording
•HHI Divestiture -On June 20, 2023, the Company completed its divestiture of its HHI segment. See Note 2 - Divestituresin the Notes to the Condensed Consolidated Financial Statements, included elsewhere in this Quarterly Report for further detail. The Company has incurred incremental project costs attributable to the divestiture, consisting of legal and professional fees to effect the realization and close of the transaction, separation and transition of systems and processes supporting the divested business and operations of enabling functions within a transition services agreement ("TSA"), plus incremental retention costs for personnel supporting such transition efforts. Incremental costs are expected to be incurred for a transition period of approximately 12-24 months following the close of the transaction.
Current wording
•HHI Divestiture -On June 20, 2023, the Company completed its divestiture of its HHI segment. See Note 2 - Divestituresin the Notes to the Condensed Consolidated Financial Statements, included elsewhere in this Quarterly Report for further detail. The Company has incurred incremental project costs attributable to the divestiture, consisting of legal and professional fees to effect the realization and close of the transaction, separation and transition of systems and processes supporting the divested business and operations of enabling functions within transition services agreements ("TSAs"), plus incremental retention costs for personnel supporting such transition efforts. Incremental costs are expected to be incurred for a transition period of approximately 12-24 months following the close of the transaction as the Company exits various TSAs.
Previous wording
•HPC Separation Initiatives -The Company has initiated projects to facilitate a strategic separation of the Company's HPC segment in the most advantageous way to realize value for both the HPC business as a standalone appliance business either through a spin, merger or sale of the business and the retained GPC and H&G businesses of the consolidated group. Costs are primarily attributable to legal and professional fees incurred to assess opportunities, evaluate transaction considerations, including potential tax and compliance implications to the consolidated group, costs directly attributable to the legal entity separation and transfer of net assets of the HPC operations from the commingled operations of the Company, plus the segregation of systems and processes. Costs attributable to the initiative are expected to be incurred until a transaction is realized or otherwise canceled.
Current wording
•HPC Separation Initiatives -The Company has initiated projects to facilitate a strategic separation of the Company's HPC segment in the most advantageous way to realize value for both the HPC business as a standalone appliance business either through a spin, merger or sale of the business and the retained GPC and H&G businesses of the consolidated group. Costs are primarily attributable to legal and professional fees incurred to assess opportunities, evaluate transaction considerations, including potential tax and compliance implications to the consolidated group, costs directly attributable to the legal entity separation and transfer of net assets of the HPC operations from the commingled operations of the Company, plus the segregation of systems and processes. Costs attributable to the initiative are expected to be incurred until a transaction is realized.
Previous wording
•Tristar Business Acquisition - During the year ended September 30, 2021, the Company acquired 100% of the Tristar Business that includes a portfolio of home appliances and cookware products sold under the PowerXL®, Emeril Lagasse®, and Copper Chef® brands. The Company incurred incremental costs to combine and integrate the acquired business with the HPC segment, primarily towards the integration of systems and processes, merger of commercial operations and supply chain, professional fees to consolidate financial records, plus incremental retention costs for personnel supporting the transition and integration efforts.
Current wording
•Tristar Integration - During the year ended September 30, 2022, the Company acquired 100% of the Tristar Business that includes a portfolio of home appliances and cookware products sold under the PowerXL®, Emeril Lagasse®, and Copper Chef® brands. The Company incurred incremental costs to combine and integrate the acquired business with the HPC segment, primarily towards the integration of systems and processes, merger of commercial operations and supply chain, professional fees to consolidate financial records, plus incremental retention costs for personnel supporting the transition and integration efforts. Substantially all costs have been incurred through September 30, 2023 and no further costs are anticipated in the subsequent periods.
Previous wording
•Fiscal 2023 and 2022 Restructuring -During the years ended September 30, 2023 and 2022, the Company entered into initiatives in response to continuing pressures within the consumer products and retail markets and adjusted strategic initiatives within certain segments, resulting in the realization of of headcount reductions. Substantially all costs associated with the initiatives have been recognized in prior periods and any subsequent amounts are attributable to changes in estimates, headcounts and timing of communication.
Current wording
•Fiscal 2023 and 2022 Restructuring -During the years ended September 30, 2023 and 2022, the Company entered into initiatives in response to continuing pressures within the consumer products and retail markets and adjusted strategic initiatives within certain segments, resulting in the realization of headcount reductions. Substantially all costs associated with the initiatives have been recognized in prior periods and any subsequent amounts are attributable to changes in estimates, headcounts and timing of communication.
Previous wording
In addition to the initiatives discussed above, the Company regularly engages in other initiatives that may incur incremental costs which may not result in a realized transaction or are less significant initiatives and therefore have been separately disclosed and recognized as other project costs. The following is a summary of incremental costs for the three month periods ended December 31, 2023 and January 1, 2023.
Current wording
In addition to the initiatives discussed above, the Company regularly engages in other initiatives that may incur incremental costs which may not result in a realized transaction or are less significant initiatives and therefore have been separately disclosed and recognized as other project costs. The following is a summary of incremental costs for the three and six month periods ended March 31, 2024 and April 2, 2023.
Previous wording
•Following the close of the HHI divestiture on June 20, 2023, the Company repaid its outstanding term loan and all outstanding borrowings with the Revolver Facility under the Credit Agreement, and terminated the Incremental Revolving Credit Facility Tranche, along with the remaining aggregate principal of its 5.750% Senior Notes due 2025 in full at the redemptions price and repurchased a portion of its remaining outstanding Senior Notes. During the three month period ended December 31, 2023, the Company repurchased $179.0 million of its outstanding bonds at a discount, recognizing a gain of $4.7 million.
Current wording
•Following the close of the HHI divestiture on June 20, 2023, the Company repaid its outstanding term loan and all outstanding borrowings with the Revolver Facility under the Credit Agreement, and terminated the Incremental Revolving Credit Facility Tranche, along with the remaining aggregate principal of its 5.750% Senior Notes due 2025 in full at the redemptions price and repurchased a portion of its remaining outstanding Senior Notes. The Company repurchased outstanding bonds at a discount recognizing a gain of $4.7 million during the six month period ended March 31, 2024.
Previous wording
The following is summarized consolidated results of operations for SBH for the three month periods ended December 31, 2023 and January 1, 2023.
Current wording
The following is summarized consolidated results of operations for SBH for the three and six month periods ended March 31, 2024 and April 2, 2023.
Previous wording
Net Sales. The following is a summary of net sales by segment for the three month periods ended December 31, 2023 and January 1, 2023, and the principal components of changes in net sales for the respective periods.
Current wording
Net Sales. The following is a summary of net sales by segment for the three and six month periods ended March 31, 2024 and April 2, 2023, and the principal components of changes in net sales for the respective periods.
Previous wording
Interest Expense. Interest expense decreased due to reduced debt borrowings and average borrowing rates following the HHI divestiture in the prior year.
Current wording
Interest Expense. Interest expense decreased due to reduced debt borrowings following the close of the HHI divestiture in the prior year with a decrease in the average borrowing rates during the respective periods.
Previous wording
Interest Income. Interest income increased primarily due to interest realized on cash proceeds received from the closing of the HHI divestiture in the prior year.
Current wording
Interest Income. Interest income increased due to interest on term deposits entered into using cash proceeds from the closing of the HHI divestiture in the prior year.
Previous wording
Gain from debt repurchase. The Company recognized income from the discount realized on the repurchase of debt. See Note 8 - Debt in the Notes to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for additional detail.
Current wording
Gain from debt repurchase. During the three and six month periods ended March 31, 2024, the Company recognized income from the discount realized on the repurchase of debt with no direct comparable in the prior periods. See Note 8 - Debt in the Notes to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for additional detail.
Previous wording
Other Non-Operating Expense (Income), Net. Other non-operating income increased due to changes in foreign currency compared to the prior year.
Current wording
Other Non-Operating Expense (Income), Net. Other non-operating income is primarily due to changes in foreign currency compared to the prior year.
Previous wording
Income Taxes. Our estimated annual effective tax rate was impacted by income earned outside the U.S. that is subject to U.S. tax, including the U.S. tax on global intangible low taxed income and certain nondeductible expenses.
Current wording
Income Taxes. Our estimated annual effective tax rate was impacted by income earned outside the U.S. that is subject to U.S. tax, including the U.S. tax on global intangible low taxed income, state income taxes, and certain nondeductible expenses.
Previous wording
The following is summarized consolidated results of operations for SB/RH for the three month periods ended December 31, 2023 and January 1, 2023:
Current wording
The following is summarized consolidated results of operations for SB/RH for the three and six month periods ended March 31, 2024 and April 2, 2023:
Previous wording
The changes in SB/RH for the three month periods are primarily attributable to the changes in SBH previously discussed.
Current wording
The changes in SB/RH for the three and six month periods ended March 31, 2024 are primarily attributable to the changes in SBH previously discussed.
Previous wording
Operating income, adjusted EBITDA and margins increased due to lower cost inventory compared to prior year, favorable product and channel mix, and savings from prior year cost reduction initiatives, partially offset by lower volumes and increased advertising investments.
Current wording
Segment net income, adjusted EBITDA and margins increased due to improvement in gross profit margins from lower cost inventory compared to prior year, favorable product and channel mix, plus reduced operating cost overhead due to savings from prior year initiatives and improved distribution costs from improved fulfillment and optimization, partially offset by increased investment in marketing and advertising.
Previous wording
Operating loss, adjusted EBITDA, and margins improved due to higher sales, manufacturing efficiencies carrying into the fiscal year, positive pricing, and operating cost reductions from cost improvement initiatives, partially offset by additional investments in product innovation and advertising.
Current wording
Segment net loss, adjusted EBITDA, and margins improved due to higher sales volume, improved gross profit margins from reduced material and input costs and manufacturing efficiencies carrying into the fiscal year, plus reduced operating cost overhead due to savings from prior year initiatives, partially offset by additional investments in marketing and advertising and product innovation.
Previous wording
Operating income, Adjusted EBITDA and margins increased due to lower cost inventory compared to the prior year, cost improvement initiatives, realization of operating spend improvements initiated in the prior year, offset by lower volume and negative mix. Operating income was further benefited by lower costs on restructuring and integration initiatives.
Current wording
Segment net income, Adjusted EBITDA and margins increased due to improved gross profit margins due to lower cost inventory compared to the prior year, cost improvement initiatives, and improved profitability through SKU rationalization and reduced excess inventory sales, plus reduced operating cost overhead due to savings from prior year initiatives, partially offset by additional investments in marketing and advertising and product innovation. Segment net income was further benefited by the recognition of proceeds from representation and warranty insurance policies of $65.0 million, intangible impairment charges in the prior year, and lower costs on restructuring and integration initiatives.
Previous wording
The following is a summary of the SBH and SB/RH cash flows from continuing operations for the three month periods ended December 31, 2023 and January 1, 2023, respectively.
Current wording
The following is a summary of the SBH and SB/RH cash flows from continuing operations for the six month periods ended March 31, 2024 and April 2, 2023, respectively.
Previous wording
Cash flows provided by SBH's continuing operations increased $75.1 million, primarily due to the lower operating costs, interest income, reduced receivables factoring, and diminished spending on strategic and restructuring initiatives. Cash flows provided by SB/RH continuing operations increased $69.4 million primarily due to the items previously discussed above.
Current wording
Cash flows provided by SBH's continuing operations decreased $67.9 million, primarily due to lower cash flow generated by working capital due to reduced receivables factoring, higher cash paid towards taxes offset by lower cash interest and the receipt of $50.0 million in representation and warranty insurance proceeds. See Note 15 - Commitments and Contingencies within Notes to the Condensed Consolidated Financial Statements, included elsewhere in this Quarterly Report for further discussion on the representation and warranty proceeds. Cash flows provided by SB/RH continuing operations decreased $73.8 million primarily due to the items previously discussed above.
Previous wording
Cash flows provided by investing activities for SBH continuing operations increased $143.6 million, primarily from the investment activity of short-term investments. Cash flows provided by investing activities of SB/RH is due to the items previously discussed.
Current wording
Cash flows provided by investing activities for SBH continuing operations increased $570.0 million, primarily from the investment activity of short-term investments offset by the recognition of a $26.9 million payment for the final purchase price settlement on the HHI divestiture, which closed in the prior year on June 20, 2023, in accordance with the Purchase Agreement. See Note 2 - Divestitures within Notes to the Condensed Consolidated Financial Statements, included elsewhere in this Quarterly report for further discussion on the HHI divestiture. Cash flows provided by investing activities of SB/RH is due to the items previously discussed.
Previous wording
Cash flows used by financing activities for continuing operations increased $496.6 million primarily due to the pay down of debt and treasury share repurchases. Refer to Note 8 – Debt in the Notes to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for more information on debt borrowings. See Note 11 – Shareholders’ Equity in the Notes to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for more information on share repurchase activity. There was no issuance of common stock, other than through the Company’s share-based compensation plans and which is recognized as a non-cash financing activity. During the three month periods ended December 31, 2023 and January 1, 2023, SBH made cash dividend payments of $14.1 million, or $0.42 per share, and $17.1 million, or $0.42 per share, respectively. Cash flows used by financing activity of SB/RH increased $490.7 million and is highly dependent upon the financing cash flow activities of SBH.
Current wording
Cash flows used by financing activities for continuing operations increased $484.9 million primarily due to the pay down of debt and treasury share repurchases. Refer to Note 8 – Debt and Note 11 - Shareholders' Equityin the Notes to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for more information. There was no issuance of common stock, other than through the Company’s share-based compensation plans and which is recognized as non-cash financing activity. During the six month periods ended March 31, 2024 and April 2, 2023, SBH made cash dividend payments of $26.8 million, or $0.42 per share, and $34.4 million, or $0.42 per share, respectively, which decreased due to the lower outstanding shares. Cash flows used by financing activity of SB/RH increased $479.0 million and is highly dependent upon the financing cash flow activities of SBH.
Previous wording
Our ability to generate cash flow from operating activities coupled with our expected ability to access the credit markets, enables us to execute our growth strategies and return value to our shareholders. Our ability to make principal and interest payments on borrowings under our debt agreements and our ability to fund planned capital expenditures will depend on the ability to generate cash in the future, which, to a certain extent, is subject to general economic, financial, competitive, regulatory and other conditions. We believe the operating cash flow based upon our current and anticipated level of operations, existing cash balances, and availability under our credit facility to be sufficient to meet our operating and capital expenditure requirements for at least the next 12 months. It is not unusual for our business to experience negative operating cash flow during the first quarter of the fiscal year due to the operating calendar with our customers and the seasonality of our working capital. Additionally, we believe the availability under our credit facility and access to capital markets are sufficient to achieve our longer-term strategic plans. As of December 31, 2023, the Company had borrowing availability of $486.9 million, net of outstanding letters of credit, under our credit facility. Liquidity and capital resources of SB/RH are highly dependent upon the cash flow activities of SBH.
Current wording
Our ability to generate cash flow from operating activities coupled with our expected ability to access the credit markets, enables us to execute our growth strategies and return value to our shareholders. Our ability to make principal and interest payments on borrowings under our debt agreements and our ability to fund planned capital expenditures will depend on the ability to generate cash in the future, which, to a certain extent, is subject to general economic, financial, competitive, regulatory and other conditions. We believe the operating cash flow based upon our current and anticipated level of operations, existing cash balances, and availability under our credit facility to be sufficient to meet our operating and capital expenditure requirements for at least the next 12 months. It is not unusual for our business to experience negative operating cash flow during the first quarter of the fiscal year due to the operating calendar with our customers and the seasonality of our working capital. Additionally, we believe the availability under our credit facility and access to capital markets are sufficient to achieve our longer-term strategic plans. As of March 31, 2024, the Company had borrowing availability of $490.3 million, net of outstanding letters of credit, under our credit facility. Liquidity and capital resources of SB/RH are highly dependent upon the cash flow activities of SBH.
Previous wording
During the three month period ended December 31, 2023, the Company completed additional repurchases of Senior Notes available for sale on the open market, at a discount. See Note 8 - Debt in the Notes to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for further detail. The Company may continue to make repayments on its debt obligations in the future, which may include repayments, redemptions, repurchases, refinancings or exchanges of our outstanding Senior Notes, any of which will be dependent on various factors, including market conditions. Any such repurchases may be affected through a variety of means, including privately negotiated transactions, market transactions, tender offers, redemptions or as otherwise required or permitted by the instruments covering the Company's outstanding indebtedness.
Current wording
During the three and six month period ended March 31, 2024, the Company completed additional repurchases of Senior Notes available for sale on the open market, at a discount. See Note 8 - Debt in the Notes to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for further detail. The Company may continue to make repayments on its debt obligations in the future, which may include repayments, redemptions, repurchases, refinancing or exchanges of our outstanding Senior Notes, any of which will be dependent on various factors, including market conditions. Any such repurchases may be affected through a variety of means, including privately negotiated transactions, market transactions, tender offers, redemptions or as otherwise required or permitted by the instruments covering the Company's outstanding indebtedness.
Previous wording
The Company has also continued to repurchase common shares through open market purchases during the three month period ended December 31, 2023. See Note 11 – Shareholders’ Equity in the Notes to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for further detail. We may, from time to time, seek to repurchase additional shares of our common stock and any further repurchase activity will be dependent on prevailing market conditions, liquidity requirements and other factors. During the three month period ended December 31, 2023, we entered into a $200.0 million rule 10b5-1 repurchase plan to facilitate daily market share repurchases through November 15, 2024, until the cap is reached or until the plan is terminated. As of December 31, 2023, there has been $11.1 million repurchased pursuant to the 10b5-1 repurchase plan.
Current wording
The Company has also continued to repurchase common shares through open market purchases during the three and six month period ended March 31, 2024. See Note 11 – Shareholders’ Equity in the Notes to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for further detail. We may, from time to time, seek to repurchase additional shares of our common stock and any further repurchase activity will be dependent on prevailing market conditions, liquidity requirements and other factors. During the three month period ended December 31, 2023, we entered into a $200.0 million rule 10b5-1 repurchase plan to facilitate daily market share repurchases through November 15, 2024, until the cap is reached or until the plan is terminated. As of March 31, 2024, there has been $108.7 million repurchased pursuant to the 10b5-1 repurchase plan.
Previous wording
As of December 31, 2023, the Company had a high level of cash reserves, as compared to the prior year, due to the cash proceeds from the HHI divestiture. The Company has temporarily invested a portion of its cash in short-term investments until such expenditures are considered required or necessary to the Company in executing its strategic plans and initiatives, including any further debt reduction and share buybacks.
Current wording
As of March 31, 2024, the Company had a high level of cash reserves, as compared to the prior year, due to the cash proceeds from the HHI divestiture. The Company has temporarily invested a portion of its cash in short-term investments until such expenditures are considered required or necessary to the Company in executing its strategic plans and initiatives, including any further debt reduction and share buybacks. If the Company does not use the proceeds from the HHI divestiture to repay debt or reinvest in the business within certain time periods by the terms of the Company's outstanding indebtedness, the Company may be required to make an asset sale offer to the holders of its Senior Notes pursuant to the terms of the Company's outstanding indebtedness.